Travel Network revenues increased 1.5% year over year to $711 million. However, softer Global Distribution System environment was an overhang on the top line. Increase of 1% in bookings drove results for this segment. Incentive expense per booking also jumped moderately to low-single digits.

Airline Solutions revenues came in at $208 million, down 0.6% from the year-ago quarter, primarily due to 4.2% decrease in AirVision and AirCentre revenues.

SabreSonic revenues rose 2% due to the impact of insolvency of Jet Airways and volume reductions at a certain carrier due to a 737 MAX incident, and the demigration of Pakistan International Airlines, Philippine Airlines, and Bangkok Airlines. A 5.4% year-over-year decline in passengers boarded was also a headwind to SabreSonic revenues.

Hospitality Solutions revenues jumped 7% year over year to $74.8 million, driven by 14.1% growth in central reservation system transactions.

Adjusted gross profit came in at $346.4 million, down 8.3% from the year-ago quarter. However, adjusted gross margin expanded 980 bps to 48.7%. Rise in booking contribution margin for the first time in three years was an upside.

Adjusted operating income decreased 26.2% year over year to $133.1 million. This was primarily due to high technology expenses related to the increase in the expensed portion of total technology spends. This was partially offset by strong revenue growth and a fall in headcount-related expenses. Adjusted operating margin of 13.5% fell 440 bps.

Adjusted operating income for the Travel Network fell 12.9% due to impact of shift in capitalization mix.

Sabre ended the quarter with cash and cash equivalents of $473.4 million compared with $396.85 million in the previous quarter.

Cash provided by operating activities increased to $166.7 million from $152 million sequentially.

Free cash flow was $141.8 million for the third quarter compared with $105.7 in the second quarter.

During the quarter, $77.6 million worth of shares were repurchased. Including dividends, Sabre returned $192.8 million to shareholders.

Guidance

Revenues for full-year 2019 are expected to be in the range of $3.97 billion to $4.01 billion. This indicates 3-5% growth. The Zacks Consensus Estimate stands at $3.99 billion.

Adjusted earnings per share are expected to be between 95 cents and $1.02. The Zacks Consensus Estimate stands at $1.03.

Free cash flow is likely to be approximately $455 million. The company expects to return to profitability recovery in 2021.

Zacks Rank and Key Picks

Sabre currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks in the broader technology sector are CDW Corporation CDW, Anixter International AXE and Benefitfocus, Inc. BNFT, each flaunting a Zacks Rank #1.

Long-term earnings growth rate for CDW, Anixter and Benefitfocus is currently projected to be 13.1%, 8% and 20%, respectively.

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